LawyersUSA

Estate planning lawyers are finding that many prenuptial agreements for older couples contain costly omissions – about health care, nursing home costs and other "elder care" costs.

While prenups always cover what happens in the event of divorce and death, they often fail to contemplate what happens if the couple is still married when one spouse must enter a nursing home.

The issue is coming up more frequently as people live longer and health costs reach astronomical levels.

"This is an emerging area of the law," said Kimberly Johnson, a trust & estates attorney with Quarles & Brady in Naples, Fla. "People feel very passionately about their different health care choices – whether to stay at home, go into an assisted living facility or nursing home."

Johnson has handled several cases involving marital disputes over health care costs, and she predicted that more cases will end up in litigation over which spouse will pay these costs and how much is considered "reasonable."

"A reasonable expense when you're 45 may not be a reasonable expense when you're 85," said Alice Reiter Feld, an elder law sole practitioner in Ft. Lauderdale, Fla. "It just means when you draw up a prenuptial [agreement], you have to be specific about what you're binding people to."

These problems are a reminder that estate planning lawyers should be consulted when prenups are drafted for all couples to deal with specific financial issues, especially as people age and need care, said Kristi Spence, a solo family attorney in San Mateo, Calif., who frequently represents clients in mediation of prenups.

New marriages, elder issues

Another factor contributing to this trend is that many older couples are remarrying later in life for the second or third time, having already accumulated their own assets and having children from previous marriages.

Each spouse is typically concerned with preserving property for his or her children.

But the silence or ambiguity on elder care issues, whether intentional or not, is leading to more disputes among couples and their adult children.

"The antenuptial agreements out there aren't doing the job," said Robert Bulloch, also an estate planning attorney with Quarles & Brady in Naples, Fla.

Johnson said she has seen several prenups where the wealthier spouse agreed to pay for the "care and maintenance" of the less wealthy spouse, but that spouse later balks at footing the bill for costly medical care such as high-end elder care or private nurses.

Paying for a spouse's daily living expenses is "fine when they're playing golf at the country club, but they don't realize they're signing up for private duty nurses 24 hours a day," she said.

Adding to these health care disputes is the fact that the children of each spouse often have power of attorney over their parents' health care decisions, and their ideas may be at odds with those of the new spouse.

"Now you have two generations of children fighting over whether these fees count as care and maintenance," Johnson said.

The level of care of each spouse is another area of dispute, said Peter Rivellini, a trust and estates lawyer with Johnson Pope Bokor Ruppel & Burns in Clearwater, Fla.

"When you have one spouse getting in-home care, the kids of the other spouse are going to be less likely to put their parent in a nursing home. They want the same level of care," he said.

Drafting options

While prenups can't anticipate every scenario – nor do the parties always want them to – here are suggestions for addressing elder care expenses on the front end:

• Long-term care insurance

A provision in a prenup can require that each spouse purchase insurance.

"We tell people to get long-term care insurance, so each spouse has their eyes wide open," said Feld.

The parties can make it mandatory that each spouse maintains a long-term care policy, so that the health care obligation is funded in advance, said Johnson.

• Cap on expenses

Another option is to put caps on medical expenses a spouse will pay in the prenup, such as paying X dollars per month.

The provision might also say if the spouse agreeing to pay for the care goes into a nursing home, "then I can't afford to pay for both, and you have to carry your own freight," said Johnson.

But some states may invalidate such a clause, said Stephen Silverberg, an elder law attorney in East Meadow, N.Y.

Such a provision would also likely be subject to dispute, based on the couple's standard of living, said Jennifer Reh, a family law practitioner who also practices with Johnson Pope.

In one case, a husband agreed to pay for all of the couple's living expenses during the marriage but then tried to get out of paying $1,500 for an assisted living facility.

"They lived a very luxurious life with private yachts, hundreds of thousands of dollars in diamonds and personal staff. It would be very hard for him to argue that he would pick up the tab for the diamonds, but now that she was in an assisted living facility, only Medicaid would do," said Reh.

The husband ended up paying for a "country club style" facility, she said.

• Separate health costs

It may also be possible to keep health care costs separate by agreement.

However, in some states there is an obligation to care for a spouse that would make such an agreement unenforceable, said Silverberg.

A prenup that says "I shall not be responsible for my spouse's nursing home" would be against public policy, he said, noting that the state can even sue the spouse to pay for the care.

In some cases, couples have had to get divorced against their wishes in order to keep their assets separate.

Another problem with apportioning health care costs in a prenup is that most couples will find this too "macabre" to talk about at the time of drafting, said Bulloch.

"If people are comfortable apportioning expenses, great, but if people are loathe to do that, a cap is a more palatable approach," he said.

Questions or comments can be directed to the writer at: sylvia.hsieh@lawyersusaonline.com